[IN THE COURT OF APPEAL.]

BIDDELL BROTHERS v. E. CLEMENS HORST

COMPANY.

Sale of Goods - C.i.f. Contract - "Terms net cash" - Right of Buyer to Inspection before Payment - Payment against Shipping Documents - Sale of Goods Act, 1893 (56 & 57 Vict. c. 71), ss. 16, 18 (r. 5), 28, 34.

A contract for the sale of hops to be shipped from the Pacific Coast to this country provided that the buyers should "pay for the said hops at the rate of ninety (90) shillings sterling per 112 lbs., c.i.f. to London, Liverpool, or Hull. Terms net cash." The contract contained no term expressly providing for payment against shipping documents:-

Held (by Vaughan Williams L.J. and Farwell L.J., Kennedy L.J. dissenting), that, on a contract in the above terms, the buyers were not bound to pay for the hops on tender of the shipping documents, but were entitled to refuse payment until, upon the arrival of the hops, they had been given an opportunity for inspection of them.

Decision of Hamilton J., ante, p. 214, reversed.

APPEAL from the judgment of Hamilton J. in an action tried by him without a jury.

The action was brought to recover damages for alleged breaches of two contracts, dated respectively October 13, 1904, and December 21, 1904.

The first contract, which was made at Sunderland between the defendants, of San Francisco and London, parties of the first part, and Vaux & Sons, Limited, of the city of Sunderland, parties of the second part, provided that "the parties of the first part agree to sell to the parties of the second part one hundred (100) bales, equal to or better than choice brewing Pacific Coast hops of each of the crops of the years 1905 to 1912 inclusive.

"The said hops to be shipped to Sunderland.

"The parties of the second part shall pay for the said hops at the rate of ninety (90) shillings sterling per 112 lbs., c.i.f. to London, Liverpool, or Hull (tare 5 lbs. per bale).

"Terms net cash.

"It is agreed that this contract is severable as to each bale.

"The sellers may consider entire unfulfilled portion of this

contract violated by the buyers in case of refusal by them to pay for any hops delivered and accepted hereunder or if this contract or any part of it is otherwise violated by the buyers.

"Time of shipment to place of delivery, or delivery at place of delivery, during the months (inclusive) of October to March following the harvest of each year's crop.

"If for any reason the parties of the second part shall be dissatisfied with or object to all or any part of any lot of hops delivered hereunder, the parties of the first part may, within thirty days after receipt of written notice thereof, ship or deliver other choice hops in place of those objected to."

The second contract was between the same parties, and in the same terms, except that it provided for the sale by the defendants to Vaux & Sons, Limited, of fifty bales of British Columbian hops equal to or better than choice Pacific Coast hops of each of the crops of the years 1906 to 1912 inclusive; c.i.f. to London.

Upon August 11, 1908, Vaux & Sons, Limited, assigned for value to the plaintiffs all their rights and benefits under the two contracts, and express notice thereof in writing was given by the plaintiffs to the defendants.

Correspondence passed between the parties as to the shipment of the 150 bales of the 1909 crop, and on January 29, 1910, the defendants wrote to the plaintiffs stating that they were ready to make shipment of the 150 bales of the 1909 crop of the contracted quality, and that "for the invoice price less freight we will value on your good selves at sight with negotiable bills of lading and insurance certificates attached to draft, and if you wish we will also attach certificates of quality of the Merchants' Exchange, San Francisco, or other competent authority to cover the shipment." On February 1 the plaintiffs replied that they were prepared to take delivery on the terms of the contracts, and that it was "in accordance with the universal practice of the trade and the custom adopted by you in your dealings with other purchasers of your hops, and it has also been your custom with our assignors to submit samples, and the samples having been accepted to give delivery in bulk in accordance with the samples; but if you decline to adopt

the usual and undoubtedly most convenient course, we can only pay for the hops against delivery and examination of each bale. We cannot fall in with your suggestion of accepting the certificate of quality of the Merchants' Exchange, San Francisco." On February 5 the defendants' solicitors wrote to the plaintiffs' solicitors that the refusal of the plaintiffs to pay for the hops except upon terms which were not in accordance with the contracts was a clear breach of the contracts by the plaintiffs, and, that being so, the defendants would not now ship to the plaintiffs the 150 bales of the 1909 crop, and they reserved all their rights in respect of the breach of contract by the plaintiffs.

Upon March 11, 1910, the plaintiffs issued the writ in this action claiming damages for breach of contract in refusing to ship or deliver the 150 bales of hops. The defence, after stating that the defendants raised no defence with reference to the assignment of the agreements, alleged that, by reason of the plaintiffs' violation of the entire unfulfilled portion of the agreements in refusing to pay for the hops in accordance with the terms of the agreements, the defendants were entitled to refuse to further perform the agreements, and they counterclaimed against the plaintiffs for damages for breach of contract in refusing to take and pay for the 150 bales of hops.

Hamilton J. gave judgment for the defendants as reported ante, p. 214.

1911. Jan. 30, 31, Feb. 1. Montague Shearman, K.C., and Eustace Hills (Leslie Scott, K.C., with them), for the plaintiffs. The learned judge below held that, without any such express term as "cash against documents," a c.i.f. contract for the sale of goods necessarily imports that the price of the goods is payable upon tender of the shipping documents, although the buyer has had no opportunity to inspect the goods. There is really no authority for that proposition. In all the cases in which the obligation to pay the price of the goods has been treated as arising upon tender of the shipping documents, such as Ireland v. Livingston (1) and Crozier, Stephens & Co. v. Auerbach (2), there were express terms in the contract such as "cash against documents." No such

(1) (1872) L. R. 5 H. L. 395.

(2) [1908] 2 K. B. 161.

obligation can be implied from the mere fact that the contract is a c.i.f. contract. The expression "c.i.f." has nothing to do with delivery or payment, but merely imports that the price of the goods is to cover the cost of insurance and the freight, and that the necessary documents must be delivered by the seller to the buyer; it does not import that the buyer is not to have the right to the opportunity for inspection of the goods before paying the price, ordinarily given to a buyer by the common law, and now under s. 34 of the Sale of Goods Act, 1893. The Court cannot read into the contract a term depriving the buyer of that right, unless it arises by necessary implication from the terms of the contract. No such implication arises from the fact that the contract is a c.i.f. contract. In the case of the present contract such an implication is rebutted by the term of the contract which speaks of violation of the contract "by the buyers in case of refusal by them to pay for any hops delivered and accepted hereunder," and the following terms which clearly indicate that "delivery" is contemplated as taking place at the place of destination. A c.i.f. contract may contain any stipulation as to time and mode of payment upon which the parties may agree: Polenghi v. Dried Milk Co. (1) There would be nothing inconsistent with the nature of such a contract if the price should be payable otherwise than by cash against documents. That being so, it is impossible, in the absence of any express stipulation as to time of payment, to imply a term in contravention of the ordinary right of a buyer to an opportunity for inspection of the goods before paying the price. The questions whether the property in the goods passes under a c.i.f. contract on their shipment, and at whose risk they then are, have no necessary connection with the question when the price becomes payable.

J. R. Atkin, K.C., and George Wallace, K.C., for the defendants. It is a necessary implication in the case of a c.i.f. contract for the sale of goods that the price is to be payable against shipping documents. A c.i.f. contract is not a contract by the seller to deliver the goods at the place of destination. His obligations under such a contract are to put the goods on board a ship bound for the place of destination indicated in the contract, to

(1) (1904) 10 Com. Cas. 42.

effect a contract of affreightment for their carriage to that place and an insurance for the voyage with regard to them, to make out an invoice to the buyer, and then to tender the necessary shipping documents to the buyer. When he has performed those obligations he has performed his contract so far as is necessary to entitle him to payment of the price. The property in the goods passes to the buyer upon their shipment, and the seller does not undertake that they shall arrive at the place of destination at all, or in any particular condition. If they are lost, or suffer sea damage, in the transit, it does not concern the seller. Either such a contract comes within the words "unless otherwise agreed" in s. 28 of the Sale of Goods Act, 1893, or the seller by tendering the necessary shipping documents satisfies the condition named in that section, namely, that the seller shall be "ready and willing to give possession of the goods to the buyer in exchange for the price." The delivery of the documents is to be regarded as a constructive delivery of the goods under such a contract. The provisions of s. 34, sub-s. 2, of the Sale of Goods Act, 1893, do not apply, because the terms of a c.i.f. contract bring it within the words "unless otherwise agreed" at the beginning of the sub-section. By s. 55 of the Sale of Goods Act, 1893, any right, duty, or liability which would otherwise arise under a contract of sale by implication of law may be negatived or varied by agreement. The term "net cash" in a c.i.f. contract must import that payment is to be against documents. If the seller does not contract that the goods shall arrive at the place of destination, or that they shall arrive in any particular condition, he cannot be taken to have contracted that there shall be an opportunity given to the buyer to inspect the goods before payment of the price. It does not follow from the fact that express terms are often inserted in a c.i.f. contract, making the price payable against delivery of the shipping documents, that it is not a necessary implication, in the absence of such terms, that the price should be so payable. The construction contended for by the plaintiffs is inconsistent with the provision with regard to the insurance of the goods, an insurance which is clearly intended to be for the protection of the buyer. The payment of the price

before inspection is quite consistent with the continuance of the buyer's right to reject the goods, if, upon inspection when they arrive, it appears that, when shipped, they were not in accordance with the contract. The vesting of the property in the buyer would be conditional upon the goods turning out, on inspection, to have been in accordance with the contract when shipped. The term of the contract which speaks of "refusal to pay for any hops delivered and accepted hereunder" is only a provision as to what shall entitle the sellers to treat the whole contract as repudiated. It really throws no light upon the question whether the payment for a particular shipment is not due upon tender of the shipping documents. [They cited Barrow v. Myers & Co. (1); Parker v. Schuller. (2)]

Eustace Hills, for the plaintiffs, in reply.

March 21. The following judgments were read:-

VAUGHAN WILLIAMS L.J. I am going in the first instance to deal with this case quite apart from any difficulties which arise on the construction of the peculiar conditions of this particular contract, and as if the words were simply "the parties of the second part shall pay for the said hops at the rate of ninety (90) shillings sterling per 112 lbs. c.i.f. to London, terms net cash."

It was argued before Hamilton J. on behalf of the defendants that the terms "net cash" in a c.i.f. contract necessarily mean "cash against documents," and that a c.i.f. contract is performed by the vendor shipping goods of the description specified in the contract, effecting a proper insurance thereon, and then tendering to the buyer the documents representing the goods, namely, the indorsed bill of lading, invoice, and policy, and that thereupon the buyer has to pay for the goods whether they have arrived or not. Hamilton J. affirmed the proposition just set forth as to performance of a c.i.f. contract by the seller, but in no way based his conclusion on the assumption that "terms net cash" means "cash against documents," and expressed his opinion that the words "terms net cash" in themselves mean only, in the

(1) (1888) 4 Times L. R. 441.

(2) (1901) 17 Times L. R. 299.

absence of proof of trade custom or trade meaning, no credit and no deduction by way of discount or rebate or otherwise, which the law would have implied.

The judgment of the learned judge is based primarily, not on Ireland v. Livingston (1) or the opinion of Blackburn J. therein stated, nor indeed upon any other authorities upon the meaning of the terms "cost freight and insurance," but is based upon the proposition that the terms c.i.f. "are now settled and, I hope I may add, well understood." Those are the words of the learned judge, and he goes on to say that it is not and cannot be contended but "that the seller under a c.i.f. contract has first of all to arrange to put on board a ship at the port of shipment goods of the description contained in the contract; secondly to arrange for a contract of affreightment under which they will be delivered at the destination contemplated in the contract; thirdly to arrange for an insurance upon the usual terms current in the trade, available for the benefit of the buyer; to make out an invoice in the manner described by Blackburn J. in Ireland v. Livingston (2), or in some other manner which will express the same thing; and, finally, he has to tender to the buyer those documents so that the buyer may know what freight he has to pay in order to obtain delivery of the goods, if they are intact, or so that he may recover for the loss of them if they have gone to the bottom." (3)

The plaintiffs contended that, in the absence of words providing for payment against shipping documents, unless they accepted a transfer of the bill of lading, the price was not to be paid until they had had the opportunity of examining the shipment, which could not be done till after the arrival of the ship in this country.

There is no evidence as to the practice or course of business between the parties to the contract of December 21, which was a contract under which the defendants entered into an agreement to sell fifty bales of British Columbia hops, equal to or better than choice brewing Pacific Coast hops, of each of the crops of

(1) L. R. 5 H. L. 395 - 406.

(2) L. R. 5 H. L. 406.

(3) The Lord Justice cited these words from the report in 16 Com. Cas. 8, 14.

the years 1906 to 1912 inclusive, the said hops to be shipped c.i.f. to Sunderland; but I understood from counsel for the defendants that the policies of insurance were taken out in the name of the defendants, and that the bills of lading were given out by the ship in the name of the defendants; but, as in the first instance I dealt with a c.i.f. contract independently of special clauses in this contract, so I propose to deal with this case independently of jus disponendi, the risk under the policy of insurance, or the retention by the defendants of possession under bill of lading, until indorsed in exchange for the price, and seek only to determine what is the obligation of payment under a c.i.f. contract which does not state when or under what conditions the payment of the price is to be made, and which does not contain a provision that payment of the price is to be made against shipping documents. Such a provision is admittedly a very usual provision, but the mere fact that it is a usual provision does not justify the reading of such a provision into the contract of sale and purchase, but rather leads to an opposite conclusion in a case where you do not find this form of words.

The observations of Martin B. and Parke B., in giving their opinions in answer to questions put to the judges by the House of Lords in Gibson v. Small (1), indicate the view that, even in the case of a commercial document, the Court generally should not read into it a condition which is not expressed, unless on the basis of a custom or understanding, either proved in evidence or long notoriously prevalent, and adopted and acted upon in Courts of law, in which latter case Courts of law would take judicial notice of it without requiring any averment or proof in the particular case, and act upon it and apply it in precisely the same manner as a rule of law. The case of Gibson v. Small (1) was an action on a policy, and the question was, whether by the law of England, in a time policy effected on a vessel then at sea, there was an implied condition that the ship should be seaworthy on the day on which the policy was intended to attach. It was held that there was no such implied condition. Martin B., in his answer to questions put by the House of Lords, says (2): "The question, therefore, really is, 'has the existence of such

(1) (1852) 4 H. L. C. 353.

(2) 4 H. L. C. 370.

a condition or warranty been notoriously prevalent amongst persons engaged in the business of marine insurance'; and for the present purpose it must be shown that the Courts of law have adopted and acted upon the principle of it." Parke B. says (1): "The whole of the law upon this subject depends upon one question, whether there is any sufficiently distinct and clear authority in the common law, for annexing any condition of this sort to a policy of assurance for time. The policy is a written instrument, which contains a number of express stipulations, but none on the subject of seaworthiness; .... If, then, there is any such warranty or condition, it must be added to the written policy, as an incident annexed to the contract; and that, either by the usage of trade, or by the common law of the land; from the nature of the policy itself, there is no other way in which it can be added. The custom of trade, which is a matter of evidence, may be used to annex incidents to all written contracts, commercial or agricultural, and others, which do not by their terms exclude it, upon the presumption that the parties have contracted with reference to such usage, if it is applicable. This is explained in the case of Hutton v. Warren. (2) But in this case there is no evidence stated on the record of such usage; and none such can be supposed to exist, unless there is evidence of it. Such a condition may, however, be annexed as a necessary incident by the common law. The simple question is, does the common law annex any such incident? An examination of the authorities, judicial decisions, and dicta, and of text-writers on the common law, from which we derive our knowledge of that law, leaves us without any satisfactory proof that the same implied warranty or condition as to seaworthiness at the commencement of the risk, which confessedly is annexed to voyage policies, or any warranty or condition as to seaworthiness, is annexed to time policies." The examination by Lord Campbell in the House of Lords and by Parke B. in his answer of the grounds on which the Court of Queen's Bench affirmed the existence of an implied warranty of seaworthiness in the case of a time policy from a supposition entertained by the judges of the Queen's Bench of the opinion of all the lawyers in modern

(1) 4 H. L. C. 396, 397.

(2) (1836) 1 M. & W. 466, 475.

times, or from the obiter dicta of some judges, shews how little judges ought to imply conditions in written commercial contracts from such materials. The origin of the warranty of seaworthiness in the case of a voyage policy was an implication from the nature of the contract, and in the case of Gibson v. Small (1) it was sought to argue that a similar implication ought to be made in the case of a time policy. The House of Lords recognized that such a condition might be recognized in the case of a contract, and that it had been so recognized in the case of a voyage policy, but refused to make such an implication in the case of a time policy.

It is said that in the case of a c.i.f. contract an implication ought to be made that payment must be made against tender of shipping documents, and this whether the ship and goods have arrived or not. It is suggested, as one of the reasons why this implication should be made, that the goods under a c.i.f. contract are carried at the risk of the buyer, and must be paid for whether the goods are lost at sea or not, because the policy is taken out on behalf and in the interest of the buyer. I do not think that any such implication ought to be made, seeing that "cash against documents" is a term which is frequently included in a c.i.f. contract by express words, and, moreover, because I do not think that the admitted fact that an object of the c.i.f. policy is to enable the goods at sea to be commercially dealt with before the ship arrives compels the buyer to take advantage of this opportunity, if for any reason he is not disposed to do so.

There is no evidence in the present case of any law merchant or custom which reads such words as "payment to be made against shipping documents," or words to that effect, into the contract. The judgment of Hamilton J. does not rest on any such basis; what he says is that, because it is now well settled and well understood that the meaning of the terms "cost freight and insurance" is that, the seller having tendered the bill of lading, invoice, and policy, which completes the delivery of the goods in accordance with the agreement in the contract, the buyer is bound to pay the price of the goods, against shipping documents, before the arrival of the goods in this country.

(1) 4 H. L. C. 353.

I gather from the words of the learned judge when dealing with the plaintiffs' case (1), "A judge, at any rate when he takes the commercial list, aspires to be both a man of business and a lawyer, but, if he cannot be both, he must be content to be as nearly a lawyer as he can, and I think the law is as I have laid it down with regard to the plaintiffs' claim," that his decision is based upon his personal knowledge in the Commercial Court. This, of course, is a statement of great weight which must impress every one, but I do not think we ought to allow this to be the basis of a decision between litigants in an action in a case where there is no evidence whatsoever either as to local usage in England or as to such general usage in England or foreign countries as is a condition of the admission and adoption as part of the law merchant of England of any legal proposition outside the common law. Nor do I think that Bowen L.J. in Sanders v. Maclean (2), when he made the observations which appear on p. 343 of the report, meant that the personal knowledge of an individual judge could suffice for the introduction into the law merchant of England of any proposition outside the common law. The law merchant may no doubt govern even the construction of a written commercial document, but in this case, as indeed in every case, there must be evidence in fact of the commercial usage before there can be admission or adoption of it.

When it is said that mercantile law is acted upon by the Courts without proof of usage, this means after it has in earlier cases been proved and adopted. I am not forgetting that in some cases classic legal authorities have been recognized as sufficient evidence of mercantile usage, especially international usage. But, even then, the authority is in terms recognized as sufficient evidence before the Courts give judgment recognizing the usage; but no such evidence was referred to in this case. It seems clear on the authorities that the law merchant must be proved as a fact in the sense that the mercantile usage, which is recognized as part of the law merchant, must be proved, and the fact must, to use the words of Wilmot J. in Edie v. East India Company (3), be reiterated. Once thus recognized the usage

(1) 16 Com. Cas. 17.

(2) (1883) 11 Q. B. D. 327, 343.

(3) (1761) 1 W. Bl. 295, 299.

becomes part of the law of England and not a mere local usage or custom. Again Lord Campbell in the House of Lords in Brandao v. Barnett (1) says that "when a general usage has been judicially ascertained and established it becomes a part of the law merchant, which Courts of justice are bound to know and recognize. Such has been the invariable understanding and practice in Westminster Hall for a great many years. There is no decision or dictum to the contrary, and justice could not be administered if evidence were required to be given toties quoties to support such usages and issue might be joined upon them in each particular case." But in the present case no decision was cited in which the mercantile law relied on had been judicially ascertained and established, and no evidence was given in support of the usage of merchants and shipowners to treat a c.i.f. contract as meaning that cash must be paid against documents whether or not the contract in words makes such a provision. On this point I have only to add that I do not think that the judgment of Kennedy L.J. (then Kennedy J.) in Polenghi v. Dried Milk Co. (2) is in any way inconsistent with the conclusion I have arrived at. On the contrary, it rather affirms that view.

Having arrived at this conclusion, it is not necessary that I should give judgment on the difficulties of construction which arise in this case, nor that I should deal with the argument that the construction put by Hamilton J. on the c.i.f. contract is inconsistent with the provisions of the Sale of Goods Act, 1893, and in particular s. 28. As to s. 28, I am not satisfied that there is anything in the present contract which excludes its operation.

As to the construction of the contract, I certainly think that the two clauses referred to by Hamilton J., the first of which contains these words: "The sellers may consider entire unfulfilled portion of this contract violated by the buyers in case of refusal by them to pay for any hops delivered and accepted hereunder," and the second of which contains the words "Time of shipment to place of delivery, or delivery at place of delivery, during the months (inclusive) of October to March following the harvest of each year's crop," and the third clause, "If for any reason" the buyers "shall be dissatisfied

(1) (1846) 12 Cl. & F. 787, 805.

(2) 10 Com. Cas. 42.

with, or object to all or any part of any lot of hops delivered hereunder," the sellers "may, within thirty days after receipt of written notice thereof, ship or deliver other choice hops in place of those objected to," taken together make it very difficult to construe this c.i.f. contract as containing an implied condition for payment of "cash against documents."

The appeal, therefore, must be allowed, and judgment entered for the plaintiffs. As to the amount, I think we have jurisdiction to send the inquiry as to amount to be dealt with by an official referee. I am not quite certain that there was not some agreement as to the amount. Of course, if there was, there is no necessity for an inquiry before the official referee. (1)

FARWELL L.J. The first question in this case is whether a contract for hops "c.i.f. to London, terms net cash," but without the words "against documents," means that the price is to be paid against documents, or after the buyer has had the opportunity of inspecting the goods. Hamilton J. has held, and I agree with him, that "terms net cash" adds nothing to the contract to pay: it means only "no credit and no deductions by way of discount or otherwise." The neat question, therefore, remains, whether the fact that the contract is c.i.f. is by itself sufficient to import "payment against documents," or, in other words, whether a contract which does not contain those words is to be read as a contract which does contain them.

Now, apart from rectification, with which we are not concerned in this case, there are three ways only in which a provision not expressed in a written document can be added to it. The first is where the words used are elliptical; the second is usage, including in that term the law merchant, whereby, under certain limitations, terms may be added to or phrases may be explained and construed in a written document; and the third is necessary implication as explained in The Moorcock (2), and Hamlyn & Co. v. Wood & Co. (3), where

(1) It was afterwards arranged that the Court should itself assess the amount of damages recoverable by the plaintiffs, which it accordingly did on a subsequent day.

(2) (1889) 14 P. D. 64.

(3) [1891] 2 Q. B. 488, 491.

Lord Esher says: "The Court has no right to imply in a written contract any such stipulation, unless, on considering the terms of the contract in a reasonable and business manner, an implication necessarily arises that the parties must have intended that the suggested stipulation should exist. It is not enough to say that it would be a reasonable thing to make such an implication. It must be a necessary implication in the sense that I have mentioned." The words of the contract here, namely, "The parties of the second part shall pay for the said hops at the rate of ninety (90) shillings sterling per 112 lbs., c.i.f. to London," are obviously elliptical so far as "c.i.f." is concerned, and on construction mean that the 90s. is to include cost insurance and freight, which are to be provided by the seller on behalf of the buyer, but they express no time or term of payment: payment is dealt with in the next sentence - "terms net cash" - and here is the natural and usual place to add "against documents" or the like, if the parties so intend. But Hamilton J. himself says that "net cash" does not mean "against documents," and I can find nothing in the whole of the words read together, or in any of them read separately, from which any such meaning can be extracted on any rules of construction known to the law. It is in my opinion equally impossible to add any term by usage. Usage must be proved by evidence, or must have been so often proved as to be part of the law merchant, and to be the subject of judicial knowledge (see Gibson v. Small (1)); but here no evidence was tendered, nor was it suggested, that there was any usage or law merchant. It is common ground that in the majority of c.i.f. contracts the words "cash" or "bills" or the like "against documents" are expressly inserted, and this very fact is almost conclusive that there is no usage or law merchant, for usage implies a term outside the written document, and is prima facie negatived by finding an express clause usually inserted in written documents of the class in question. The clauses usually inserted in a particular form of written contract are quite distinct from clauses not so inserted but added by usage or law merchant:

(1) 4 H. L. C. 353.

the usage or law merchant dispenses with the express insertion. The omission from a contract of a clause usually inserted in contracts of that class is evidence of the intention of the parties that such clause shall not apply, not that it shall: nor can the Court infer from the express insertion of a particular clause in most of the contracts of a particular class any usage justifying the addition of such a clause to a contract of that class in which it is not inserted. If Hamilton J. had ruled that there was any usage, so often proved that he had judicial knowledge of its existence, to the effect that a c.i.f. contract always implied "cash against documents," whether so expressed or not, I should probably have deferred to his great knowledge and experience in commercial cases, but he has not done so, nor has counsel suggested that any such usage has ever been proved, and they could hardly be ignorant of its existence, if it had any; in the absence of any such usage the judge cannot mero motu add to the law merchant, as to which Foster J. says in Edie v. East India Dock Co. (1), "Much has been said about the custom of merchants. But the custom of merchants, or law of merchants, is the law of the kingdom and is part of the common law. People do not sufficiently distinguish between customs of different sorts. The true distinction is between general customs, (which are part of the common law), and local customs (which are not so). This custom of merchants is the general law of the kingdom, part of the common law"; and Wilmot J. says (2), "The custom of merchants is part of the law of England; and Courts of law must take notice of it, as such. There may indeed be some questions depending upon customs amongst merchants, where, if there be a doubt about the custom, it may be fit and proper to take the opinion of merchants thereupon; yet that is only where the law remains doubtful. And even there, the custom must be proved by facts, not by opinion only; and it must also be subject to the control of law." Indeed in the Court below the respondents' counsel argued on the construction of the words "net cash," and did not suggest that "c.i.f." could be construed as including "payment against documents." This reticence is important when the question is as to the

(1) (1761) 2 Burr. 1216, 1226.

(2) 2 Burr. 1228.

existence of usage - a matter that could hardly be unknown to the counsel of experience who argued this case.

There remains, therefore, only the third ground. At common law the delivery of goods by the seller and acceptance and payment by the buyer are regarded as concurrent acts, the buyer being entitled to a reasonable opportunity for inspection before he accepts and pays. It is thus expressed by Rolfe B. in Startup v. Macdonald (1): "Now, it may be observed, that in every contract by which a party binds himself to deliver goods, or pay money, to another, he in fact engages to do an act which he cannot completely perform without the concurrence of the party to whom the delivery or the payment is to be made. Without acceptance on the part of him who is to receive, the act of him who is deliver or to pay, can amount only to a tender. But the law considers a party who has entered into a contract to deliver goods or pay money to another, as having, substantially, performed it, if he has tendered the goods or money to the party to whom the delivery or payment was to be made, provided only that the tender has been made under such circumstances that the party to whom it has been made, has had a reasonable opportunity of examining the goods, or the money, tendered in order to ascertain that the thing tendered really was what it purported to be. Indeed, without such an opportunity an offer to deliver or pay does not amount to a tender." The general rule, therefore, is payment against inspected goods; and this is simple enough where both parties and the goods are together in the same place. But when goods are shipped from across seas, the contract becomes complicated by the fact that the delivery, although not complete until acceptance, commences on a c.i.f. contract on shipment, and the property passes, subject to certain qualifications not necessary now to consider, when the goods are shipped; if the seller fails to ship, or ships goods not according to contract, the breach by him is committed there and then: Parker v. Schuller (2); Crozier, Stephens & Co. v. Auerbach. (3) But the buyer's acceptance and duty to pay is not on shipment. The c.i.f. contract usually provides for

(1) (1843) 6 Man. & G. 593, 610.

(2) 17 Times L. R. 299.

(3) [1908] 2 K. B. 161.

payment against documents, a practice convenient for both parties, as the bill of lading enables financial dealings on the credit of the goods to be carried out before the arrival of the goods; but no one has ever suggested that on a c.i.f. contract, silent as to time of payment, the buyer is bound to pay on shipment of the goods. The result must therefore be that the ordinary rule of law is not displaced, namely, payment against examined goods. It is said that this cannot be so, because under the contract in common form "c.i.f. payment against documents" the buyer has to unload and warehouse the goods at his own expense; whereas the seller would have to bear such expense if he has to afford the buyer an opportunity of inspection before payment can be required. But this is only to state the different consequences flowing from two contracts expressed in different terms: there is no such necessity for any implication as to justify the Court in altering the usual incidence of burdens under a contract silent as to this particular burden; and actual physical necessity is not suggested, and would indeed be disproved by the fact that in this very case such inspection before payment has been given by the sellers in one case at any rate during the existence of this contract. I do not suggest that the conduct of the parties under the contract is admissible as evidence of the construction of the contract; I think that it is not (although it would be so in a suit to rectify on the ground of common error); but it is admissible to shew that there is in fact no such impossibility as to render the contract impossible of performance without the addition of the terms suggested.

In my opinion Lord Blackburn's statement in Ireland v. Livingston (1) throws no light at all on the question before us, and I cannot follow the reasoning of Hamilton J. in this case on pp. 14 and 15 of the report in 16 Com. Cas. I will assume that as a matter of usage the seller is bound to tender the bill of lading to the buyer when it arrives, and, if the buyer accepts it, he must, of course, pay for the goods on such acceptance, because the delivery of the bill of lading is a symbolical delivery of the goods, and, if the goods are accepted, the right of antecedent (though not of subsequent) inspection before

(1) L. R. 5 H. L. 406.

payment is thereby waived, just as it would be in the case of acceptance of the goods themselves without inspection. But I fail to follow the consequence said by the learned judge to ensue. The duty on A. to tender to B. a document before he can require payment does not impose on B. a duty to accept such document as equivalent to goods, if he has a right to inspect such goods before accepting and paying for them. B. has the option of choosing between two alternative rights: he may accept symbolical delivery or actual delivery, but in the absence of express contract it is at his option, not at the seller's. In the great majority of cases, it suits both buyer and seller better to give and accept symbolical delivery by the bill of lading, and the existence and exercise of this option explain why in cases where the c.i.f. contract does not contain the words "cash against documents," or the like, the contract is in fact often so carried out. But this is no evidence of usage for the buyer to accept in all cases, or, in other words, to waive the option. If the goods were lost at sea, the option would at once cease because inspection would have been rendered impossible, and the buyer would be bound to pay against documents.

Then it is said that Parker v. Schuller (1) is an authority against the appellants. In my opinion, that case has no bearing on the present. The question there related solely to the duty of the seller and the place where the performance of the contract by him was to be carried out. We are here concerned with the duty of the buyer. No one doubts that the seller's breach of a c.i.f. contract arises on failure to ship, but no one suggests that the buyer's duty to pay arises on such shipment; his duty depends on the terms of the contract, and never came into question in Parker v. Schuller. (1)

The basis of my judgment is that the buyer has a common law right (now embodied in the Sale of Goods Act) to have inspected goods against payment, and this cannot be taken away from him without some contract expressed or implied, and here I can find neither. In this particular, and very ill-drawn, contract there are words, especially in the clause referring to refusal to pay "for any hops delivered and accepted hereunder," which bear out the

(1) 17 Times L. R. 299.

conclusions at which I have arrived, but I prefer to rest my judgment on the general grounds above stated. It is said that this decision will upset mercantile practice, but I fail to see any difficulty in parties who desire it adding "against documents" to their contracts - a course hitherto adopted in the majority of c.i.f. contracts.

In my opinion the appeal should be allowed and judgment entered for the plaintiffs.

KENNEDY L.J. This is an appeal of the plaintiffs in the action against the judgment of Hamilton J. sitting as a judge without a jury for the trial of commercial cases in the King's Bench Division. The action before him comprised a claim of the plaintiffs for damages for breaches of two contracts, partly typewritten and partly printed, and a counter-claim of the defendants for breaches of the same contracts.

So far as regards the claim of the plaintiffs, which Hamilton J. has dismissed, his judgment was in my opinion right, and but for the contrary opinion of the other members of this Court, from whom I have the misfortune to differ, I should have ventured to think the case a reasonably simple one.

The material terms of the two contracts, with the conflicting contentions of the litigants thereon, are carefully stated by Hamilton J. in the opening portion of his judgment (1), and it is needless for me to repeat them here at length. It is sufficient, in order to make clear the reasoning of my judgment, to summarize the statement of the learned judge. Each of the contracts in question is a contract for the sale of foreign hops of specified quality, to be shipped by the defendants, the sellers, from the Pacific Coast to Sunderland, and to be paid for by the plaintiffs, the purchasers, at the rate of 90s. sterling per 112 lbs., c.i.f. to London, Liverpool, or Hull, terms net cash. No point arises, as the learned judge states, upon the question of the calculation of freight being to London, Liverpool, or Hull, while the shipment was to Sunderland. Possibly the explanation of this arrangement is that Messrs. C. Vaux & Sons, Limited, the original purchasers, who assigned their interest under the contracts to the plaintiffs,

(1) [1911] 1 K. B. 214; 16 Com. Cas. 12, 13.

carried on business at Sunderland. Anyhow, the fact is, as it has been treated throughout the argument, immaterial. The dispute between the parties is as to the conditions under which, according to the true interpretation of these contracts, the price is to be paid. The plaintiffs' case is that the price was not to be paid until they had been given an opportunity of inspecting the shipment, which could not be given until after its arrival in this country. The defendants contend that the plaintiffs' obligation was to pay for the hops, whether they arrived or not, against tender of the shipping documents. I agree with Hamilton J., and indeed it was not disputed on the argument before us, that the plaintiffs in the correspondence clearly expressed their intention not to take delivery of the 1909 shipment (which is that to which this litigation is confined) except upon the terms of payment for which they now contend; and, therefore, if they are wrong in that contention, they relieved the defendants from the obligation to tender, and they have themselves broken these contracts so far as regards this particular shipment. Before litigation began, the defendants, for the sake of peace, offered, as a matter of grace, to make the plaintiffs the reasonable and businesslike concession of attaching to the shipping documents certificates of quality of the Merchants' Exchange at San Francisco, or other competent authority. But this offer was rejected by the plaintiffs, and the parties, respectively, are now standing upon their rights, as they allege, under the documents which contain the contracts. The Court, therefore, has in the present case to decide what are the true conditions of the right of the seller to payment under a c.i.f. contract, if that commercial contract is to be performed strictly according to its tenor.

Hamilton J. has unhesitatingly decided in favour of the defendants. In his opinion it was unnecessary to refer to authorities as to the meaning of the terms "cost freight and insurance," because those terms are now well settled and, as he hoped he might add, well understood. But he has given a reasoned judgment to which I can discover no answer in the argument of the appellants' counsel, which was for all practical purposes the same as that which appears from the Law Reports

to have been put forward by them unsuccessfully in the Court below. But for the differing opinion of Vaughan Williams L.J. and Farwell L.J., which, of course, raises in my mind a doubt of the correctness of my own, I should have been content to adopt that judgment as it stands. But, in the circumstances, and believing as I do that this appeal affects a large and important branch of import business, it is, I think, right that I should deal with the case in my own way, although this will involve a much longer judgment than I should otherwise have thought necessary or justifiable.

The plaintiffs' - that is the appellants' - argument, apart from a reference to certain subordinate and subsidiary printed clauses to which I shall advert after dealing with the main question, hangs upon considerations arising from (a) the absence, after the words "net cash," of such words as "against documents," or "in exchange for documents"; (b) the provisions of s. 28 and s. 34 of the Sale of Goods Act, 1893, in respect of the buyer's right to have delivery in exchange for the price and to have an opportunity to examine goods tendered for acceptance.

In regard to the wording of the contract, I do not think that the comment that the terms might have been more fully expressed helps one way or the other as to the interpretation of the contract as it stands. All that can be said is that, the condition of payment not being expressly stated except in so far as the words "net cash" negative payment by acceptance and the allowance of deduction or discount, it must be settled by the interpretation of the document according to established principles of mercantile law. If any implication is necessary, the law, as stated by Bowen L.J. in his judgment in The Moorcock (1), desires to give such business efficacy to the transaction as must have been intended at all events by both parties, who are business men. This is not a case, as it seems to me, of a contract the terms of which present ambiguity or conflict. There is no contrariety between "cost freight and insurance, net cash" and "cost freight and insurance, net cash against documents." Both the fuller and the shorter form are, I believe, in everyday use: examples of both can be found within the covers of

(1) 14 P. D. 64, 68.

modern law reports (see, for example, Parker v. Schuller (1) and Sanders v. Maclean (2)); and, although it is probable, I should think, - and the present litigation certainly vindicates its expediency - that the fuller form is the more common, it has, so far as I am aware, never before this case been suggested that a contract "cost freight and insurance, net cash" or a contract "cost freight and insurance, payment by acceptance" may not imply "against documents" in each case. The well-known passage in the opinion of Lord Blackburn (then Blackburn J.) in Ireland v. Livingston (3), referred to by Hamilton J., in which a great master of the commercial law stated the course of business in the performance of a cost freight and insurance contract as very usual and well understood, plainly cannot be relied on for the respondents as an actual decision in their favour; for the statement itself is obiter, and the particular contract in that case contained the words "payment by acceptance on receiving shipping documents." But Lord Blackburn's opinion was delivered in the House of Lords forty years ago, and, speaking for myself, I do not recollect hearing it suggested until I listened to the argument of the plaintiffs' counsel in this case that the value of that opinion, as setting forth the relative rights and duties of seller and buyer in the ordinary course of procedure under a c.i.f. contract, wholly depended upon the insertion of "against (or "in exchange for") shipping documents" after the statement of the mode of payment by cash or by acceptance, as the case may be.

Let us, however, leave out of sight altogether for the present all question of usage or judicial recognition of usage. The application of the principles and rules of the common law, now embodied in the Sale of Goods Act, 1893, to the business transaction embodied in the c.i.f. contract appears to me to be decisive of the issue between these parties. Let us see, step by step, how according to those principles and rules the transaction specified in such a c.i.f. contract as that before us is and, I think, must be carried out in order to fulfil its terms.

At the port of shipment - in this case San Francisco - the

(1) 17 Times L. R. 299.

(2) 11 Q. B. D. 327.

(3) L. R. 5 H. L. 395.

vendor ships the goods intended for the purchaser under the contract. Under the Sale of Goods Act, 1893, s. 18, by such shipment the goods are appropriated by the vendor to the fulfilment of the contract, and by virtue of s. 32 the delivery of the goods to the carrier - whether named by the purchaser or not - for the purpose of transmission to the purchaser is prima facie to be deemed to be a delivery of the goods to the purchaser. Two further legal results arise out of the shipment. The goods are at the risk of the purchaser, against which he has protected himself by the stipulation in his c.i.f. contract that the vendor shall, at his own cost, provide him with a proper policy of marine insurance intended to protect the buyer's interest, and available for his use, if the goods should be lost in transit; and the property in the goods has passed to the purchaser, either conditionally or unconditionally. It passes conditionally where the bill of lading for the goods, for the purpose of better securing payment of the price, is made out in favour of the vendor or his agent or representative: see the judgments of Bramwell L.J. and Cotton L.J. in Mirabita v. Imperial Ottoman Bank. (1) It passes unconditionally where the bill of lading is made out in favour of the purchaser or his agent or representative, as consignee. But the vendor, in the absence of special agreement, is not yet in a position to demand payment from the purchaser; his delivery of the goods to the carrier is, according to the express terms of s. 32, only "prima facie deemed to be a delivery of the goods to the buyer"; and under s. 28 of the Sale of Goods Act, as under the common law (an exposition of which will be found in the judgments of the members of the Exchequer Chamber in the old case of Startup v. Macdonald (2)), a tender of delivery entitling the vendor to payment of the price must, in the absence of contractual stipulation to the contrary, be a tender of possession. How is such a tender to be made of goods afloat under a c.i.f. contract? By tender of the bill of lading, accompanied in case the goods have been lost in transit by the policy of insurance. The bill of lading in law and in fact represents the goods. Possession of the bill of lading places the goods at the disposal

(1) (1878) 3 Ex. D. 164.

(2) 6 Man. & G. 593.

of the purchaser. "A cargo at sea," says Bowen L.J. in Sanders v. Maclean (1), "while in the hands of the carrier, is necessarily incapable of physical delivery. During this period of transit and voyage, the bill of lading by the law merchant is universally recognized as its symbol, and the indorsement and delivery of the bill of lading operates as a symbolical delivery of the cargo. Property in the goods passes by such indorsement and delivery of the bill of lading, whenever it is the intention of the parties that the property should pass, just as under similar circumstances the property would pass by an actual delivery of the goods. And for the purpose of passing such property in the goods and completing the title of the indorsee to full possession thereof, the bill of lading, until complete delivery of the cargo has been made on shore to some one rightfully claiming under it, remains in force as a symbol, and carries with it not only the full ownership of the goods but also all rights created by the contract of carriage between the shipper and the shipowner. It is a key which in the hands of a rightful owner is intended to unlock the door of the warehouse, floating or fixed, in which the goods may chance to be." The meaning of "delivery" under the Sale of Goods Act is defined by s. 62 to be "voluntary transfer of possession from one person to another." Such delivery, as the learned draftsman of the Act and its editor remarks in his note to this section, may be either actual or constructive: see Chalmers' Sale of Goods Act, 1893, 7th ed. p. 140; and, as Bowen L.J. has pronounced, in the case of seaborne goods, the delivery of the bill of lading operates as a symbolical delivery of goods. But then I understand it to be objected on behalf of the plaintiffs: "Granted that the purchaser might, if he pleased, take this constructive delivery and pay against it the price of the goods; what is there in the 'cost freight and insurance' contract which compels him to do so? Why may he not insist on an option of waiting for a tender of delivery of the goods themselves after having had an opportunity of examining them after their arrival?"

There are, I think, several sufficient answers to such a proposition. In the first place, an option of a time of payment is not

(1) 11 Q. B. D. 327, 341.

a term which can be inferred, where the contract itself is silent. So far as I am aware, there is no authority for the inference of an option as to times of payment to be found either in the law books or in the Sale of Goods Act. Secondly, if there is a duty on the vendor to tender the bill of lading, there must, it seems to me, be a corresponding duty on the part of the purchaser to pay when such tender is made. Very relevant on this point is the language of Brett L.J. in his judgment in Sanders v. Maclean (1), which applies to this class of contract the same principle as was expounded by Bowen L.J. in The Moorcock. (2) He said: "The stipulations which are inferred in mercantile contracts are always that the party will do what is mercantilely reasonable"; and, if it be the duty implied in the c.i.f. contract, as held by Brett L.J. in that case, that the vendor shall make every reasonable exertion to send forward and tender the bill of lading as soon as possible after he has destined the cargo to the particular vendee, it is, I venture to think, "mercantilely reasonable" that the purchaser should be held bound to make the agreed payment when delivery of the goods is constructively tendered to him by the tender of the bill of lading, either drawn originally in his favour or indorsed to him, and accompanied in case of loss by the policy of insurance. For thereunder, as the bill of lading with its accompanying documents comes forward by mail, the purchaser obtains the privilege and absolute power of profitably dealing with the goods days or weeks, or, perhaps, in the case of shipments from a distant port, months, before the arrival of the goods themselves. This is, indeed, the essential and peculiar advantage which the buyer of imported goods intends to gain under the c.i.f. contract according to the construction which I put upon it.

But, in truth, the duty of the purchasers to pay against the shipping documents, under such a contract as the present, does not need the application of that doctrine of the inference in mercantile contracts that each party will do what is "mercantilely reasonable," for which we have the great authority of Lord Esher. The plaintiffs' assertion of the right under a cost freight and insurance contract to withhold payment until delivery of the

(1) 11 Q. B. D. 327, 337.

(2) 14 P. D. 64.

goods themselves, and until after an opportunity of examining them, cannot possibly be effectuated except in one of two ways. Landing and delivery can rightfully be given by the shipowner only to the holder of the bill of lading. Therefore, if the plaintiffs' contention is right, one of two things must happen. Either the seller must surrender to the purchaser the bill of lading, whereunder the delivery can be obtained, without receiving payment, which, as the bill of lading carries with it an absolute power of disposition, is, in the absence of a special agreement in the contract of sale, so unreasonable as to be absurd; or, alternatively, the vendor must himself retain the bill of lading, himself land and take delivery of the goods, and himself store the goods on quay (if the rules of the port permit), or warehouse the goods, for such time as may elapse before the purchaser has an opportunity of examining them. But this involves a manifest violation of the express terms of the contract "90s. per 112 lbs. cost freight and insurance." The parties have in terms agreed that for the buyer's benefit the price shall include freight and insurance, and for his benefit nothing beyond freight and insurance. But, if the plaintiffs' contention were to prevail, the vendor must be saddled with the further payment of those charges at the port of discharge which ex necessitate rei would be added to the freight and insurance premium which alone he has by the terms of the contract undertaken to defray.

Finally, let me test the soundness of the plaintiffs' contention that according to the true meaning of this contract their obligation to pay arises only when delivery of the goods has been tendered to them after they have had an opportunity of examination, in this way. Suppose the goods to have been shipped, the bill of lading taken, and the insurance for the benefit of the buyer duly effected by the seller, as expressly stipulated in the contract. Suppose the goods then during the ocean transit to have been lost by the perils of the sea. The vendor tenders the bill of lading, with the insurance policy and the other shipping documents (if any) to the purchaser, to whom from the moment of shipment the property has passed, and at whose risk, covered by the insurance, the goods were at the time of loss. Is it, I ask myself, arguable that the purchaser could be heard to say,

"I will not pay because I cannot have delivery of and an examination of the goods"? But it is just this which is necessarily involved in the contention of these plaintiffs. The seller's answer, and I think conclusive answer, is, "You have the bill of lading and the policy of insurance." It is noticeable that in the course of the argument in Tregelles v. Sewell (1) Martin B. observes, "The purchaser was to have a policy of insurance, which is usually considered as equivalent to the goods," and earlier in the same argument Wilde B. (2) asked, "If the meaning is 'to be delivered at Harburgh,' what necessity is there for insurance?" The contract in that case was a contract in the fuller form, namely, against documents, but it does not seem to me that that affects the value of those observations as to the relative rights of the buyer and seller.

I have only to add as to this, the main question in the present case, a few words in regard to ss. 28 and 34 of the Sale of Goods Act. As I have already said, my own view as to s. 28 is that the section is satisfied by the readiness and willingness of the seller to give possession of the bill of lading. I am, however, far from saying that the view which is suggested in the course of the judgment of Hamilton J., namely, that when the parties have entered into a c.i.f. contract they have "otherwise agreed," is not one which could be supported, as I hold that a similar view is the true view also in regard to s. 34, sub-s. 2. As to s. 34, sub-s. 1, there is no difficulty. No one suggests that the plaintiffs, if they pay against documents, become thereby precluded from rejecting the goods if, on examination after their arrival, they are found to be not goods in accordance with the contract, or from recovering damages for breach of contract if they prefer that course.

So far I have tested the validity of the appellants' contention that under a simple c.i.f. contract the seller is entitled to payment only against delivery of the goods themselves and after examination of the goods, altogether apart from authority, by applying, as I hope, established principles and rules of law to a c.i.f. contract so as to give it in the language of Bowen L.J. such efficacy as must have been intended by the parties to it as business men.

But, in truth, the judgment of the Court of Appeal (A. L.

(1) (1862) 7 H. & N. 574, 579.

(2) 7 H. & N. 578.

Smith M.R., Collins L.J., and Romer L.J.) in the case of Parker v. Schuller (1) cannot, in my judgment, be reconciled with this contention of the present appellants. In Parker v. Schuller (1) the case came before the Court of Appeal on an appeal from the judge in chambers, who had affirmed an order giving the plaintiffs leave under Order XI., r. 1 (e), to issue a writ and serve the defendant to an action in contract, who was a foreigner out of the jurisdiction, with notice of the writ. The validity of the judge's order depended according to the terms of Order XI., r. 1 (e), upon the existence of a breach, or alleged breach, within the jurisdiction. The contract was in every essential point identical with the contract in the present case. It was a simple c.i.f. contract, without mention of payment against documents, the goods sold being goods to be shipped from Germany to Liverpool. The goods had not been shipped. The breach alleged by the plaintiffs in the indorsement upon the writ of summons and in the affidavit in support of their application was the non-delivery of the goods themselves to the buyers in Liverpool. The judge in chambers (Farwell J.), who heard the application ex parte in the first instance, and Lawrance J., who affirmed his order, had held that the non-delivery of the goods in Liverpool did, as the plaintiffs contended, constitute a breach of the contract within the jurisdiction. The Court of Appeal reversed their decision, holding that this non-delivery of the goods themselves upon which the plaintiffs relied in their writ and the affidavit in support of their application did not constitute a breach of the c.i.f. contract; and there is, I think, a noteworthy confirmation of the opinion of Hamilton J. that the law on this point has long been treated as well settled in the fact that Mr. Horridge (now Horridge J.), the counsel for the plaintiffs in Parker v. Schuller (1), expressly declined even to argue the point upon which his clients had obtained their order from the judges appealed from, and upon which the plaintiffs, the appellants in the present case, base their appeal to this Court, but endeavoured to uphold that order upon the ground, not relied upon in the writ or in the affidavit, that under the c.i.f. contract the seller is bound to deliver to the buyer the bill of lading and the policy of insurance with the other

(1) 17 Times L. R. 299.

shipping documents (if any), and that their unquestionable failure to do this constituted a breach within the jurisdiction which would justify the grant to his clients of the order for service of notice of the writ which they had obtained. According to the judgment of Hamilton J., and my own also, Mr. Horridge's argument as to the obligation of the seller under a c.i.f. contract not merely to ship the goods at the foreign port, but to deliver the shipping documents to his buyer here, was well founded, and the judgments of the Court of Appeal in Parker v. Schuller (1) contain nothing in conflict with that view. But all the members of the Court declined to deal with any defence of the order appealed against which rested upon a breach other than that which was put forward in the plaintiffs' writ of summons and affidavit; and, being clearly of opinion that under a c.i.f. contract there was no obligation on the seller to deliver the goods themselves in this country, they allowed the appeal. The case is so important that I think it is my duty to quote one passage from the judgment of the Master of the Rolls at p. 300 of the report in the Times Law Reports: "Upon the appeal the alleged contract to deliver the goods at Liverpool was dropped, the contract being 'c.i.f. Liverpool,' and it was not argued that the contract was to deliver the goods at Liverpool. That was abandoned. The plaintiff therefore was wrong in his application. It was not contended that a c.i.f. contract was a contract to deliver goods in this country." Then, after referring to Mr. Horridge's argument that the contract did bind the seller to deliver the shipping documents, the Master of the Rolls proceeded: "It was enough in the present case to say that that was not the cause of action indorsed on the writ of summons nor the cause of action alleged in the affidavit upon which leave to issue the writ and to serve notice thereof out of the jurisdiction was granted. The claim was for non-delivery of the goods. It was not until the case came into this Court that the plaintiff set up another cause of action. That could not be allowed."

The case of the plaintiffs on the present appeal that the defendants can demand payment only upon delivery of the goods

(1) 17 Times L. R. 299.

logically depends upon the alleged obligation of the defendants to deliver the goods themselves in this country, and we cannot, it appears to me, reverse the judgment of Hamilton J. in this case without holding, as a necessary conclusion, that this Court decided wrongly in Parker v. Schuller (1) when it held, in regard to a simple c.i.f. contract, essentially identical with the c.i.f. contract in the present case, that it created no such obligation on the part of the seller.

In regard to the subsidiary or supplemental clauses of the contracts in question, from which the plaintiffs' counsel sought, to some slight extent, to draw support for their interpretation of the principal or governing provisions with which I have already dealt, I have really little or nothing to add to that which my brother Hamilton has said in considering this part of the plaintiffs' argument. These clauses are printed clauses, not very clearly expressed, but apparently intended to meet certain possible contingencies which we have not to consider in deciding the present issue. They do not appear to me to throw any useful light upon the construction of the contracts in regard to the conditions of payment. I may add, again referring to Tregelles v. Sewell (2), that the fact that there is a reference to delivery of goods in a c.i.f. contract was held in that case not sufficient to alter the effect of the c.i.f. terms. There the contract was in its fuller form - "payment upon delivery of bill of lading and policy" - but this does not, I think, affect the principle if the contracts are to be performed strictly according to their tenor. In my judgment, the judgment of Hamilton J. was right, and this appeal, so far as relates to the plaintiffs' claim, should be dismissed.

Solicitors for plaintiffs: Nicholson, Graham & Jones.

Solicitors for defendants: Parker, Garrett & Co.

(1) 17 Times L. R. 299.

(2) 7 H. & N. 574.

E. L.